Retail

Russia's X5 Group Targets Big Expansion Of Its Discount Format

By Dayeeta Das
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Russia's X5 Group on Wednesday said it plans to open around 1,000 discount stores next year as the country's largest retailer seeks to gain a stronghold in a sector that it expects to account for 20% of the market in five years' time.

X5 has prioritised the expansion of its Chizhik hard discounter format, which saw a 19-fold increase in revenue year-on-year from January through September. The retailer in July identified that Russian shoppers were switching to cheaper food items because of a drop in real disposable income.

Ilya Yakubson, head of Chizhik, said the company planned to bring Chizhik store numbers to more than 1,500 in 2023 from more than 400 now, and to 5,000 in 2026.

Yakubson, who was speaking at an X5 conference, said discounters were growing faster than other shop formats in Russia and would account for 20% of the market in five years' time.

Shift In Consumer Habits

As well as falling incomes, high inflation, which was running at an annualised rate of 12.3% as of 21 November, has contributed to the shift in consumer habits.

High inflation has for years been a concern for Russian households as it dents their spending power and eats into living standards. Poverty rates are relatively high in Russia and surveys show more than half of all households have no savings.

In August, the food retailer announced plans to resume investments to grow and expand the business after reporting a 79.4% jump in second-quarter net profit to RUB 26.8 billion (€440 million).

News by Reuters, edited by by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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